Street Calls of the Week
Investing.com -- J.P. Morgan has updated its calls on the European infrastructure sector, naming Ferrovial (BME:FER) its top pick on resilient North American toll roads while cutting Getlink SE (EPA:GETP) to Neutral amid weaker traffic trends and rising yields.
Ferrovial’s North American toll road portfolio continues to deliver resilient earnings, leading J.P. Morgan to raise its price target to €53 from €49 and add the stock to its Analyst Focus List.
The bank sees potential catalysts from “Nasdaq 100 inclusion in 2025 and valuation crystallisation” at the New Terminal One (NTO) project at JFK Airport in New York in 2026, alongside possible new project awards.
In the longer term, analysts led by Elodie Rall view Ferrovial’s long-duration assets with significant pricing power as “the most attractive in the sector”.
For French toll road operators Vinci SA (EPA:SGEF) and Eiffage SA (EPA:FOUG), the bank acknowledged political uncertainty tied to France’s surtax extension but argued that share price declines have overshot fundamentals.
Its sensitivity analysis suggested that even an extension to 2030 would only imply mid-single-digit market cap losses.
Vinci’s price target was set at €142, while Eiffage’s stands at €135, both rated Overweight.
The bank also stressed its preference for toll roads over airports, pointing to stronger valuation support and greater visibility.
Airports, it said, face major regulatory negotiations upcoming, “likely coupled with higher capex cycles and a lack of visibility on tariffs.”
J.P. Morgan is Overweight on Aeroports de Paris (EPA:ADP) on valuation grounds but Neutral on Aena (BME:AENA), which it expects to see higher spending under its next regulatory framework.
It also recently cut Fraport (ETR:FRAG) to Neutral after strong share price gains and upgraded capex guidance at first-half results.
In the latest note, analysts also downgraded Getlink to Neutral and removed it from the Analyst Focus List.
The company’s reliance on a single long-duration concession leaves its valuation highly sensitive to interest rates, while traffic in its shuttle business remains below pre-pandemic levels.
Passenger traffic is still 14% under 2019 levels and truck volumes are 26% lower, reflecting Brexit and macroeconomic pressures.
While analysts see long-term opportunities in the railway network, they prefer to wait for “improved traffic and earnings momentum in the core shuttles business, or for a more supportive valuation.”